For the half year ended June, PropNex, the largest real estate agency in town, reported earnings of $42.3 million, up 122.6% y-o-y. Revenue in the same period was up 73.3% to $598.9 million, led by a bigger volume of new launches that PropNex's army of more than 13,000 agents helped to sell.
To reward shareholders, PropNex will be paying an interim dividend of 5 cents per share, equivalent to a payout ratio of 87.5%.
The strong results seen in 1H2025 were the result of robust property transactions from 4Q2024 and into early 2Q2025, says Adrian Loh of UOB Kay Hian.
Since then, he notes that property transactions have remained strong in 2Q2025 and 3Q2025-to-date and this arguably bodes well for the company’s full year results, says Loh, adding that there were 5,429 new units launched in 1H2025 and this should rise to 7,724 in 2H2025.
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Besides keeping his "buy" call, Loh has raised his target price for PropNex to $2 from $1.35, after he applied a higher valuation multiple of 19.5x, from 12.3x.
"With over 13,600 agents under the PropNex banner at present, the company is our preferred way to play the stability of transaction volumes in the Singapore public and private residential market," says Loh.
Lock Mun Yee of CGS International has also become more bullish. Taking into account higher new home sales, volume transactions and also higher margins with a better commission mix towards higher-yielding project marketing, she has raised her FY2025 - FY2027 earnings forecast by 25.9% to 33.1%.
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This has led to a higher target price of $1.77 from $1.25 earlier, which is based on the average of net cash-adjusted FY2025 earnings of 10x and 5-year DCF
valuation.
"We like PropNex as a leader in the property brokerage business in Singapore and given its strong cash balance of $136.8 million as at the end of 1HFY2025 that will likely underpin its high dividend payout ratio," she adds.
For Lock, potential re-rating catalysts: stronger-than-projected residential market performance and further expansion of its market share across all property transaction segments.
On the other hand, downside risks include a weaker macroeconomic outlook and a surge in mortgage rates that could dampen demand for housing purchases and affect its earnings.
Paul Chew of PhillipCapital has observed another positive trend for PropNex that leads to his increased optimism. He sees PropNex further increasing its market share with the addition of 982 agents this year to 13,618, an increase of 8%.
To put this growth into perspective, it is the largest increase in four years and double the rate of growth for the next three largest agencies combined.
Chew's DCF-based target price has been raised to $2.02 from $1.33, following higher earnings but lower risk-free assumptions.
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He likes too how PropNex can pay a forecasted dividend yield of 6.1%, supported by net cash of $137 million and ROE of 63%.
On the other hand, Eric Ong of Maybank Securities is "slightly disappointed" by the lack of special dividends, which he says was widely anticipated by the market.
Nonetheless, citing higher sales and margins assumptions, he has raised his FY2025 to FY2027 earnings forecasts by between 36 and 39%.
By applying a higher valuation multiple of 18x earnings, Ong's new target price is $1.68, up from $1.14 previously.
"While we still like PropNex for its market leadership and net cash position, we suggest that investors wait for a better entry level," says Ong, who has a "hold" call on this counter.
One reason why Ong prefers to remain cautious is that the government is constantly keeping a close eye on the residential market. Last month, the government imposed higher seller's stamp duty.
From Ong's perspective, this latest policy move is of minimal impact as most local buyers are owner-occupiers or longer-term investors and not those looking for a quick flip.
"Further cooling measures cannot be ruled out," says Ong, adding too that potential higher income ceiling for new HDB flats might moderate demand for both resale HDB and private properties.
